ROME – Italy’s construction sector experienced a setback in July 2025, with activity contracting for the first time in five months, ending a period of modest growth. The HCOB Italy Construction Purchasing Managers’ Index (PMI) registered at 48.3, falling from 50.2 in June. A reading below 50 indicates a contraction in the sector.
The downturn was felt across the board, with residential, commercial, and civil engineering all seeing a decline. The sharpest drop was recorded in civil engineering activities. Construction firms have pointed to a decrease in new orders, weaker demand, and the closure of some construction sites as the primary reasons for the pullback.
This slump in activity has had a ripple effect throughout the industry. Purchasing volmes by construction companies fell at their most rapid pace in nearly a year. Consequently, the growth in employment has slowed, and there has been a noticeable decline in the use of subcontractors.
Despite the slowdown, companies continued to face rising input costs driven by higher prices for raw materials. However, overall inflationary pressures are reported to be historically subdued. On a more positive note, while delays in supplier delivery times have persisted, there are signs that these bottlenecks are beginning to ease.
The current challenges have understandably impacted morale, with business sentiment dropping to a six-month low as concerns over falling demand weigh on companies.
However, looking towards the future, the sentiment within the Italian construction industry remains mildly optimistic. Expectations for the year ahead are still positive, showcasing a resilience that stands out when compared to other major economies in the eurozone. The broader eurozone construction sector saw its downturn deepen in July, with France experiencing a particularly sharp contraction. This context suggests that while Italy’s construction sector has hit a temporary snag, its underlying outlook is comparatively robust.
